Forex Gold Exchange
Forex Trading, or foreign currency exchange, is a type of investment that is currently experiencing an economic boom. Every day over $1 trillion is exchanged in foreign currency exchange transactions.
But what has led to this remarkable upturn?
To gain a better understanding of forex trading it’s necessary to look at its history over the last 100 years or more.
It used to be that the gold exchange standard ruled over the international economic system. Under the gold exchange standard, international currencies gained much stability because they were supported by the price of gold. This proved extremely important during the years between 1876 and 1914.
Unfortunately the gold exchange standard suffered many boom and bust periods. This was due to gold reserves running low as a country’s economy strengthened. This resulted in money diminishing, interest rates rising and recessions starting.
This caused prices to drop which brought in foreigners from other countries to rush in and buy the low-priced commodities thus injecting money and gold back into the economy.
Then in 1944 The Bretton Woods Agreement was established.
This was supposed to begin an international monetary steadiness by fixing the international currencies against the American dollar and setting the dollar at a rate of $35 per ounce of gold.
This shifted the whole economic dominance away from Europe, and over to the USA.
But the massive post-war construction boom during the 1950s destabilized the exchange rates which had been established by the Bretton Woods Agreement.
In 1971 the Agreement was abandoned when the US dollar could no longer be exchanged into gold.
This left foreign currencies free to float across all nations.
The use of computers and other technology in the 1980s accelerated forex trading more easily through the different time zones of Asia, Europe and the USA.
Since then forex trading has increased from $1 billion a day in the 19 80s to nearly $2 trillion a day in the 21st Century.
And that amount is still increasing rapidly every day.
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Article Source: ArticlesBase.com – The History of Why Forex Trading is Booming
